A housing company set up and owned by Redbridge Council can no longer afford to build any of the 489 new homes it had planned.
Redbridge Living Ltd was created in 2018 to build three housing schemes on council-owned land in Clements Road, Ilford, Loxford Lane and Seven Kings.
At a cabinet meeting this week, council leader Jas Athwal said the projects were no longer profitable for the council-owned company as construction costs have “shot up”.
All three schemes were previously passed by the council’s planning committee and then rejected by the Greater London Authority (GLA) for not including enough affordable homes.
The council’s leadership has now agreed the council will take over the projects, all currently “under assessment” by officers, and increased funding for the projects from £70 million to £80 million.
At the meeting on September 14, Cllr Athwal said: “We’ve explored all other options of delivery.
“With the onset of Brexit and labour hard to come by, and materials at such an extra cost, the best thing to look at now is the cheapest way to develop for residents, and that’s what we seek to do.”
At a meeting of the council’s overview committee the previous day, he told councillors that prices are “now in a different stratosphere” compared to when the projects were first conceived.
Past proposals on all three sites were rejected by the GLA because less than half of the planned homes would be affordable.
In December 2019, the application for the company’s first ever scheme on Clements Road, was described as “wholly unacceptable” for only offering 29 per cent affordable housing.
The Clements Road scheme plans to build 94 flats in two blocks of nine and ten storeys, while the Loxford Lane development would see 17 houses and four blocks of 142 homes built on a former school and hostel site.
The biggest development, in Seven Kings, hopes to see 236 homes built, with additional space for social enterprise and community use.
According to a council report, the total cost of Loxford Lane and Clements Road is estimated at £78.395m, with a further £1.605m needed to “bring a recommended scheme forward” at Seven Kings.
The report states: “The Loxford Lane scheme is expected to generate a surplus of £2.648m and Clements Road a deficit of £1.919m and it is proposed to use the surplus from Loxford to cross-subsidise Clements Road leaving a net surplus of £0.729m.”
The report warns that even a 1 per cent inflation in the costs would have a significant impact on costs.